On Tuesday, US benchmark equity indexes experienced a notable rise, as traders assessed comments made by a Federal Reserve governor and anticipated the forthcoming official inflation data for the month of September, set to be released later this week. The Nasdaq Composite saw a significant increase of 1.5%, reaching 18,182.9.
The S&P 500 also gained 1%, closing at 5,751.1, while the Dow Jones Industrial Average advanced moderately by 0.3% to 42,080.4. Technology stocks spearheaded the gains across various sectors, with energy and materials being the only sectors to close lower on the day. In her remarks, Fed Governor Adriana Kugler expressed her willingness to endorse further reductions in the central bank's benchmark lending rate if inflation trends continue as forecasted.
"Still, my approach to any policy decision will continue to be data-dependent and rely on multiple and diverse sources of data to form my view of how the economy is evolving," Kugler stated. Last month, the Federal Open Market Committee implemented a reduction in interest rates by 50 basis points, reflecting a proactive stance towards managing economic conditions. In terms of yields, the US two-year yield declined by four basis points to close at 3.96%, while the yield on the 10-year note eased by less than one basis point to 4.02%.
This downward movement in yields suggests a cautious market, as investors await clearer signals on inflation and economic momentum. Expectations are mounting for government data to reveal an increase in US consumer inflation of 0.1% sequentially and 2.3% on an annual basis for last month, according to consensus estimates compiled by Bloomberg.
Deutsche Bank shared insights indicating that declines in energy prices are likely to moderate the sequential gains in headline consumer price indices compared to core measures. They suggested, “Should our expectations hit the mark, the year-over-year growth rate of the headline CPI would drop by 30 basis points to 2.3%, while that for core would tick down a tenth to 3.2%.” Additionally, the US producer prices report for September is scheduled for release on Friday, which will further illuminate the inflation landscape. Amidst these developments, small business confidence in the US showed an improvement, albeit less than anticipated last month, as persistent inflation concerns loomed large for business operators.
This insight was highlighted in the latest survey conducted by the National Federation of Independent Business. On the trade front, the US trade deficit demonstrated a narrowing in August, supported by an uptick in exports alongside a decrease in imports. According to government data, "The resolution of the dockworkers strike earlier this month ensures supply chain disruptions would be minimal and removes a key risk to trade outlook," as noted by Oxford Economics. In the commodities market, West Texas Intermediate crude oil prices fell by 4.2%, settling at $73.90 per barrel.
Market analysts at D.A. Davidson remarked, "A rally in oil prices paused as traders awaited a response from Israel concerning last week's Iranian rocket attacks." In corporate news, shares of Palo Alto Networks surged by 5.1%, making it the leading performer on the Nasdaq and one of the top stocks on the S&P 500.
This surge followed Goldman Sachs raising its price target on the stock to $425 from the previous $376, coupled with a maintained buy rating. On the flip side, PepsiCo adjusted its full-year organic revenue growth outlook downward, despite third-quarter earnings exceeding Wall Street expectations, though overall sales fell short of market forecasts, leading to a 1.9% increase in the company's shares. Conversely, Super Micro Computer faced one of the sharpest declines on both the Nasdaq and the S&P 500, witnessing a drop of 5%.
In the precious metals market, gold fell by 0.9%, trading at $2,641.20 per troy ounce, while silver dropped 3.4%, closing at $30.90 per ounce..